Smartlinx3 asks for more

Kapi-Mana News - - NEWS - By MICHAEL KOPP

Four years af­ter it claimed it would soon be self-suf­fi­cient, city coun­cil-backed broad­band com­pany Smartlinx3 (SLX3) has again asked share­hold­ers for a cap­i­tal in­jec­tion – this time to pay off its $500,000 loan from the failed South Can­ter­bury Fi­nance, which is near­ing its fi­nal ex­ten­sion due date.

The pri­vate com­pany started six years ago to bring fi­bre to homes in Porirua and the Hutt Val­ley, has re­ceived about $5 mil­lion in fund­ing from the Hutt City, Up­per Hutt City and Porirua City coun­cils, the Hutt Mana Char­i­ta­ble Trust and cen­tral Govern­ment.

SLX3 is al­ready tech­ni­cally in de­fault on the loan, but with ‘‘letters of com­fort’’ from some of its four pub­lic back­ers, South Can­ter­bury Fi­nance gave it an ex­ten­sion. South Can­ter­bury Fi­nance’s re­ceivers also con­tin­ued the loan.

Al­ter­na­tively, the com­pany sug­gests the coun­cils take over the ser­vic­ing of the debt.

The last in­jec­tion of coun­cil money was in March of this year, when the three coun­cils came up with $90,000 each for ad­di­tional shares.

There have been two ad­di­tional share of­fers since then, but it is not known who may have sub­scribed to them, or for how much. There do not ap­pear to have been any more cap­i­tal in­jec­tions from the four pub­lic share­hold­ers.

The lat­est rev­e­la­tion comes af­ter the res­ig­na­tion of com­pany di­rec­tor Leo Austin, a rep­re­sen­ta­tive of in­vestor Hutt Mana Char­i­ta­ble Trust (HMCT).

Mr Austin, ap­pointed only a year ago by HMCT, with $825,000 in­vest­ment in shares that are now worth much less than that, would not give his rea­son for re­sign­ing.

He said there were ‘‘some mat­ters’’ the share­hold­ers had to sort out. As of the Kapi-Mana News dead­line, no re­place­ment had been ap­pointed.

The March share of­fer coun­cils bought was con­tin­gent upon SLX3 reach­ing a to­tal share of­fer re­sult of $320,000.

It is not known whether that was achieved.

By mid-2010, SLX3 was so re­duced in in­come that it laid off all its staff and con­tracted its op­er­a­tions to Welling­ton pi­o­neer broad­band com­pany Ci­tyLink.

It is out of the run­ning for the Govern­ment’s Ul­tra Fast Broad­band Ini­tia­tive, though it may re­ceive some in­come from a deal with Ci­tyLink’s owner TeamTalk, to share its in­stalled fi­bre base for the project.

The three coun­cils con­tinue to keep al­most all de­tails of SLX3’s deal­ings with them se­cret.

The res­ig­na­tion of Mr Austin may have pre­cip­i­tated a cri­sis of con­trol over the com­pany, which needs a board of three di­rec­tors to func­tion, ac­cord­ing to Hutt City chief ex­ec­u­tive Tony Stallinger.

Claims by Hutt City councillor Max Shier­law that the Lo­cal Govern­ment Act makes SLX3 a coun­cil-con­trolled or­gan­i­sa­tion be­cause of Mr Austin’s de­par­ture were re­futed by Mr Stallinger on le­gal ad­vice. The mat­ter is with the au­dit of­fice.

An at­tempt to ta­ble a mo­tion at Hutt City Coun­cil’s fi­nance and au­dit com­mit­tee on Oc­to­ber 5 to con­firm that SLX3 should be treated as a CCO, was re­jected by of­fi­cers and the com­mit­tee chair.

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